Obama administration authorizes more natural gas exports

The Obama administration on Wednesday authorized a fourth company to broadly export U.S. natural gas, giving Dominion conditional approval to sell the fossil fuel abroad after processing it at a Maryland facility.

The Energy Department’s decision means that as long as it secures other required permits, Dominion Cove Point will be able to sell as much as 770 million cubic feet of natural gas per day for the next 20 years to Japan and other countries that do not have free-trade agreements with the United States.

Sen. Ron Wyden, D-Ore., the chairman of the Senate Energy and Natural Resources Committee, urged the Obama administration to be more skeptical of future proposals to export natural gas harvested in the United States, lest the foreign sales drive up prices at home. Analysts broadly have predicted total U.S. natural gas exports might settle somewhere between 5 and 10 billion cubic feet per day.

“The United States is now squarely in the range that experts are saying is the most likely level of U.S. natural gas exports,” Wyden noted. “If (the Energy Department) approves exports above that range, the agency has an obligation to use most recent data about U.S. natural gas demand and production and prove to American families and manufacturers that these exports will not have a significant impact on domestic prices, and in turn on energy security, growth and employment.”

Critics of expanded natural gas exports — including some large industrial users of the fossil fuel — say more foreign sales could cause the domestic price to climb, hiking energy bills for manufacturing plants as well as households. Manufacturers who use the fossil fuel as a building block for plastics and chemicals also say higher prices could blunt a competitive advantage that has spurred them to move facilities to the United States.

And export enthusiasts say more foreign sales of natural gas would ensure new markets and demand that are essential to sustaining the current U.S. drilling boom. The government’s Energy Information Administration has predicted the U.S. will produce a record-setting 69.96 billion cubic feet of natural gas on average each day this year, driven largely by hydraulic fracturing techniques that involve blasting sand, water and chemicals underground.

Dominion aims to convert its existing Cove Point facility so it can liquefy natural gas and load the super-chilled product onto tankers. The facility was originally built as a terminal to receive and regassify tanker shipments of LNG, before today’s surge in domestic natural gas production largely negated the need for those imports.

The Energy Department’s action on Dominion comes roughly four weeks after the last LNG export authorization, a swifter timeline than some had anticipated, especially as analysts expect the bar for approvals to climb with each new approval.

Sen. Lisa Murkowski, R-Alaska, who has championed broader LNG exports, said she was “encouraged that the Department of Energy seems to have picked up the pace of its reviews.” But she noted that the Cove Point approval came nearly two years after Dominion first applied for the export license.

“The United States has a narrowing window of opportunity to join the global gas trade,” Murkowski said. “In order for us to take advantage of the geopolitical and economic benefits offered by selling American gas to our friends and allies overseas, projects like Dominion’s Cove Point must be approved without unnecessary delay.”

Dozens of LNG export facilities are planned around the globe, as companies in the U.S., Australia, Canada and other countries clamor for a foothold in Asian markets hungry for natural gas.

Environmentalists questioned the wisdom of the Dominion approval, saying it would tether the U.S. to fossil fuels for decades.

“Exporting LNG to foreign buyers will lock us into decades-long contracts, which in turn will lead to more drilling — and that means more (hydraulic fracturing), more air and water pollution, and more climate-fueled weather disasters like record fires, droughts, and superstorms like last year’s Sandy,” said Deb Nardone, director of the Sierra Club’s Beyond Natural Gas Campaign.

Twenty other export proposals are pending at the Energy Department, which is vetting the applications on a case-by-case basis, following an order that was set in December. In announcing its decision Wednesday, the Energy Department vowed to continue processing the applications individually, even as it continues “to monitor any market developments and assess their impact in subsequent” decisions.

Next in line is a second application from Freeport LNG to export 1.4 billion cubic feet per day of natural gas, followed by a proposal from Cameron LNG for 1.7 billion cubic feet per day.

A federal law dictates that the Energy Department must affirm proposed exports are in the public interest before granting licenses to sell the fossil fuel to countries that don’t have free-trade agreements with the United States — a benchmark that tilts in favor of the foreign sales.

Even after companies have approvals and secure financing for the massive, multibillion-dollar liquefaction facilities, it can take years to build them.

Photo: Thomas B. Shea / For the Chronicle

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The Freeport LNG plant on April 9, 2014 at Quintana, TX. Freeport LNG is in the processing of buying all the homes in Quintana -- a tiny island town with a population of about 60 -- before it begins construction of an LNG export facility. The move has divided the town. less

The Freeport LNG plant on April 9, 2014 at Quintana, TX. Freeport LNG is in the processing of buying all the homes in Quintana -- a tiny island town with a population of about 60 -- before it begins ... more

Photo: Thomas B. Shea / For the Chronicle

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The Freeport LNG plant on April 9, 2014 at Quintana, TX. Freeport LNG is in the processing of buying all the homes in Quintana -- a tiny island town with a population of about 60 -- before it begins construction of an LNG export facility. The move has divided the town. less

The Freeport LNG plant on April 9, 2014 at Quintana, TX. Freeport LNG is in the processing of buying all the homes in Quintana -- a tiny island town with a population of about 60 -- before it begins ... more

Photo: Thomas B. Shea / For the Chronicle

Image 3 of 12

The Freeport LNG plant on April 9, 2014 at Quintana, TX. Freeport LNG is in the processing of buying all the homes in Quintana -- a tiny island town with a population of about 60 -- before it begins construction of an LNG export facility. The move has divided the town. less

The Freeport LNG plant on April 9, 2014 at Quintana, TX. Freeport LNG is in the processing of buying all the homes in Quintana -- a tiny island town with a population of about 60 -- before it begins ... more

Photo: Thomas B. Shea / For the Chronicle

Image 4 of 12

The Freeport LNG plant on April 9, 2014 at Quintana, TX. Freeport LNG is in the processing of buying all the homes in Quintana -- a tiny island town with a population of about 60 -- before it begins construction of an LNG export facility. The move has divided the town. less

The Freeport LNG plant on April 9, 2014 at Quintana, TX. Freeport LNG is in the processing of buying all the homes in Quintana -- a tiny island town with a population of about 60 -- before it begins ... more

Photo: Thomas B. Shea / For the Chronicle

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The LNG plant can be seen with the town of Quintana on April 9, 2014 at Quintana, TX.

The LNG plant can be seen with the town of Quintana on April 9, 2014 at Quintana, TX.

Photo: Thomas B. Shea / For the Chronicle

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A Roseate Spoonbill takes off on April 9, 2014 in Freeport, Texas. With the expanding of the LNG plant mangy people think it will effect the wildlife in the area.

A Roseate Spoonbill takes off on April 9, 2014 in Freeport, Texas. With the expanding of the LNG plant mangy people think it will effect the wildlife in the area.

Photo: Thomas B. Shea / For the Chronicle

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A Roseate Spoonbill flies on April 9, 2014 in Freeport, Texas. With the expanding of the LNG plant mangy people think it will effect the wildlife in the area.

A Roseate Spoonbill flies on April 9, 2014 in Freeport, Texas. With the expanding of the LNG plant mangy people think it will effect the wildlife in the area.

Photo: Thomas B. Shea / For the Chronicle

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The Dominion Liquified Natural Gas (LGN) facility in Cove Point, Md. A domestic natural gas boom already has lowered U.S. energy prices while stoking fears of environmental disaster. Now U.S. producers are poised to ship vast quantities of gas overseas as energy companies seek permits for proposed export projects that could set off a renewed frenzy of fracking. Expanded More than 20 projects to export LNG are under review by the Energy Department. (AP Photo/Dominion) less

The Dominion Liquified Natural Gas (LGN) facility in Cove Point, Md. A domestic natural gas boom already has lowered U.S. energy prices while stoking fears of environmental disaster. Now U.S. producers are ... more

Photo: Associated Press

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Pipelines run from the offshore docking station to four liquefied natural gas (LNG) tanks at the Dominion Resources Inc. Liquified Natural Gas facility in Cove Point, Md. A domestic natural gas boom already has lowered U.S. energy prices while stoking fears of environmental disaster. Now U.S. producers are poised to ship vast quantities of gas overseas as energy companies seek permits for proposed export projects that could set off a renewed frenzy of fracking. (AP Photo/Matt Houston, File) less

Pipelines run from the offshore docking station to four liquefied natural gas (LNG) tanks at the Dominion Resources Inc. Liquified Natural Gas facility in Cove Point, Md. A domestic natural gas boom already ... more

Photo: Matt Houston / Associated Press

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Energy Secretary nominee Ernest Moniz, of Massachusetts, testifies before a Senate Energy and Natural Resources committee on his nomination on Capitol Hill in Washington. During the hearing, Moniz hailed a stunning increase" in natural gas production as nothing less than a "revolution" that has led to reduced emissions of carbon dioxide and other gases that cause global warming. (AP Photo/Manuel Balce Ceneta, File) less

Energy Secretary nominee Ernest Moniz, of Massachusetts, testifies before a Senate Energy and Natural Resources committee on his nomination on Capitol Hill in Washington. During the hearing, Moniz hailed a ... more

Photo: Manuel Balce Ceneta / Associated Press

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Sen. Ron Wyden, D-Ore., speaks to reporters on Capitol Hill in Washington. With more than 20 projects to export liquefied natural gas (LNG) under review by the Energy Department, Wyden, chairman of the Senate Energy and Natural Resources Committee, said officials should seek a sweet spot for LNG exports, allowing enough to spur drilling and increase gas supplies, but not enough to create export-driven price hikes. (AP Photo/Harry Hamburg, File) less

Sen. Ron Wyden, D-Ore., speaks to reporters on Capitol Hill in Washington. With more than 20 projects to export liquefied natural gas (LNG) under review by the Energy Department, Wyden, chairman of the Senate ... more